CalPERS to Market Retirement Mutual Funds

January 24, 2007 (PLANSPONSOR.com) - Local
government employees in California already in a state
retirement plan will be able to choose to invest in new
tax-deferred fund options managed by the nation's largest
public pension program.

The California Public Employees Retirement System
(CalPERS) announced that the Golden State public workers
would have the option of putting retirement money in funds
it would manage that would be tied to CalPERS $225 billion
in assets, according to a Reuters news report.

The 22,600 city, county, school and other municipal
employees now have about a dozen traditional mutual fund
choices through outside financial services firms. The
change is expected to take effect in June.

According to the news report, if the program proves
successful, CalPERS may open it to the general public.
However, such a move is at best a few years away because
the pension fund’s board does not want to endanger the
retirement system’s nonprofit status and because
legislation would be required.

Individual investors may find the products interesting
beause of CalPERS’ broad holdings, clout in financial
markets and solid returns. For example, CalPERS posted a
12.3% return in its 2005-06 fiscal year that ended June 30,
marking its third consecutive year of double-digit
returns.

CalPERS officials are interested in opening the pension
fund’s services to the public because it would generate
revenue from management fees, CalPERS officials say. The
fee revenue would help hold down required payments to
CalPERS from local government agencies that contract with
the pension fund to manage retirement accounts, according
to the news report.